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New York Forex Report: FOMC The Focus

New York Forex Report: FOMC The Focus

New York Forex Report: The FOMC meeting concludes at 1900BST with the policy statement (unchanged rates but some sense of the modalities of the balance sheet unwind), updated projections and the dot plot. Market expectations are still equivocal on the prospect of a rate increase barely 50% priced for December. FED watchers look for a third rate tightening at the end of the year but any signs that conviction is weakening will likely weigh on still fragile USD sentiment. The balance sheet wind down may be modestly USD supportive; broadly, longer-term yield spreads have moved against the USD this year as global central banks (for the most part) approach the end game of extra-ordinary accommodation. The real support for the USD may be in the more nuanced form of how policy changes affect global USD liquidity which, by most measures has been rising in recent months and weighing again on the USD’s broader valuation. Broadly, markets appear to be positioning for more volatility post FOMC and shading bets towards USD weakness. On the day, the NZD is out-performing on local polling showing the ruling National Party ahead of Labour in the latest election poll (vote September 23rd); NZ releases Q3 GDP this evening (expected firm). The AUD is well supported following positive comments on the global outlook by the RBA’s Ellis; however, iron ore prices remain soft.

NORTH AMERICA US housing market data was mixed as housing starts declined on a monthly basis even as building permits rebounded by the same measure. Number of new housing construction that began construction in Aug dipped 0.8% MoM to 1.18 million, and though improved from a 2.2% decline previously, it was lower than an expected increase of 1.7%. Building permits rose 5.7% MoM and rebounded from a 3.5% fall in Jul. While generally considered as a leading indicator of future demand, there is no assurance that it gets translated into firmer housing starts and sales.

EUROPE Save for construction output, data out of the Eurozone improved. The ECB’s current account surplus widened to €25.1b in July from €22.8b in Jun. ZEW’s survey of economic expectations returned more positive results as reading rose to 31.7 in Sept, up from 29.3 previously. Meanwhile, construction output grew slower by 3.4% YoY in July, easing from 4.3% previously.

ASIA Japan’s trade surplus narrowed in August, sliding to ¥113.6b from ¥421.7b. Even as exports growth surged 18.1% YoY to ¥ 6278, imports kept pace with a 15.2% increase to ¥ 6164. Minutes of the previous RBA meeting revealed that board members remain optimistic on employment growth, which was opined to be broad-based across the states, and further improvement is likely to continue based on forward indicators. Members also noted that macroeconomic data over the last month “had, on balance been positive and consistent with gradual pick-up in growth as forecast”.

1-3 Week View – 1.3263 achieved as this acts as support 1.3836 is the next upside objective only a close back below 1.2770 would jeopardise the bullish advance.Retail Sentiment: BearishTrading Take-away: Long

Patrick has been trading for the past ten years. After liquidating several accounts in his early days he stopped ‘gambling’ and applied himself as a student of risk. Self taught and more self aware thanks to Mr Market. Patrick applies simple technical strategies based around market price and time structure to identify high probability trade locations.

Daily Set Up: #EURAUD Trading The Channel https://t.co/u9Kwfc3r7K Update #EURAUD short from 1.5565; stop loss moved to breakeven